William Brodsky, Chairman and CEO of the CBOE
William Brodsky, Chairman and CEO of the CBOE and Chairman of the World Federation of Exchanges, shares his views on OTC derivatives in the Financial Times' "Trading Room"
- Unregulated OTC derivatives may not have started last year's financial crisis, but they acted as a powerful accelerant to the subprime crisis
- With 471 trillion in notional value, the global derivatives market is more than five times larger than the global equities and bond markets combined
- In contrast to OTC derivatives, regulated exchanges continued to provide transparency, price discovery, certainty of execution and protection against counterparty risk through centralized trading and clearing
- Regulated exchanges delivered as promised: no failures, no closures, no taxpayer rescues
- In order to minimize systemic risk and create a well-functioning derivatives market, governments must legislate trading of OTC derivatives on liquid and organized markets
- The threat of cross-border regulatory arbitrage is real
- Governments and regulators have the means to avert the next disaster
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